Amazing the stock is down 2% today, i call this a buying opportunity, here’s why:
McDonald’s Corp.,the Oak Brook, Ill., fast-food chain, reported first-quarter net income rose 11% on 8.9% higher revenue and 4.2% higher comparable sales.
Estimates were $1.14 a share of profit on $6.01 billion of revenue.
Earnings reached $1.21 billion, or $1.15 a share, from $1.09 billion, or $1 a share, in the year-earlier quarter. Revenue was $6.11 billion from $5.61 billion.
The global comparable-sales number reflects rises of
2.9% in the U.S
5.7% in Europe
3.2% in the division covering Asia, the Mideast and Africa.
“Second-quarter comparable sales are trending in line with or higher than those of the first quarter” said Chief Executive Jim Skinner.
Credit Suisse has an Outperform rating and a price target of $89 per share, recently increased from $87
Raising est. on stronger int’l comps, favorable FX, target price increases from $87 to $89: Following Feb. comps our F11 EPS est. increases to $5.14 from $5.11, F12 to $5.57 from $5.54, and F13 to $6.07 from $6.04. Increases reflect stronger int’l comps, favorable FX, and only a small reduction in the US comp despite a Feb. miss, as we see 2-yr. trends improving as we move past weather challenges. We still see a clear roadmap to 20% total returns in 2011, driven by: 12% F11 EPS growth, a 3.3% div. yield, and ~1.5 turns of P/E multiple expansion.
The Street rates MCD an A- Buy stating
MCD’s revenue growth has slightly outpaced the industry average of 4.5%. Since the same quarter one year prior, revenues slightly increased by 4.0%. This growth in revenue appears to have trickled down to the company’s bottom line, improving the earnings per share.
So why is the stock down today? Fears of Food and Labor Inflation
Those fears may be real, but the affect all competitors of McDonald’s. McDonald’s may have an edge on the competition with its expansion plans in China and its ability to control costs better than most restaurants.
Other reasons to add include a nice dividend yield of 3.11%